16jul02




WALL Street has staged a last-minute recovery from more devastating losses, with the Dow closing just 45 points down after a massive sell-off overnight.




The Dow Jones industrials fell as much as 439 points during the session before bargain-hunting bolstered the blue chips.




Technology shares climbed into positive territory in the final minutes of trading in what was an extremely volatile session.




The Dow was near the closing low it reached after the September 11 terror attacks when it began to move higher in late afternoon. But the recovery was due to more attractive prices rather than any change in investor sentiment.




"Some people are stepping in to see if they can make some money. I don't know if that will be sustained," said Stephen Carl, principal and head of equity trading at The Williams Capital Group.




The Dow recovered much of its loss but still closed down 45.34, or 0.5 per cent, at 8,639.19, according to preliminary calculations.




Combined with last week's loss of 694.97, the blue chips' have fallen 740 points over six straight losing sessions.




Last week marked the Dow's largest weekly point decline since September 21, when they dropped 1,369.70 following the terrorist attacks.




The market's broader indicators, having already fallen through their September 21 lows, were mixed after recovering from their lows for the session.




The Nasdaq composite index rose 8.61, or 0.6 per cent, to 1,382.11, having earlier dropped 58 points.




Last week the Nasdaq saw a loss of 74.86, or 5.2 per cent.




The Standard & Poor's 500 index fell 3.53, or 0.4 per cent, to 917.86, recovering from a loss of nearly 45 points. The S&P ended last week down 67.64, or 6.8 per cent.




Corporate accounting scandals have spooked investors, making them mistrustful of earnings reports and outlooks for the remainder of the year.




"For lack of a better description, you have as much full-fledged panic as you are going to get," said Tony Cecin, director of institutional trading at US Bancorp Piper Jaffray in Minneapolis.




"The negative mentality is as pervasive as I have ever seen it, and I went through (the) '73 and '74 (bear market)."




Investors seem to be in the throes of a deep depression, one that shows no sign of lifting for the foreseeable future.




"I have been selling a lot this year," said Roger Hing, 70, a retired electronics engineer in Fountain Valley, California.




"I don't think the economy is going to pick us as much as everyone thinks it is. The investing public is very concerned, at least I am, about what is happening with bookkeeping. Corporate officers are taking advantage of us little people."




Despite mounting evidence of an economic recovery, investors have been unloading stocks for eight weeks due to unceasing worries about the integrity of corporate accounting and prospects for earnings growth. The major indexes have not finished a week higher since mid-May.




"Just as the markets were driven on the upside by emotion — euphoria and greed — this market is driven by fear and despair," said Hugh Johnson, chief investment officer at First Albany Corp.




"It is not at all unusual for the market to disconnect from the economy and earnings when fear takes hold."




Bookkeeping concerns weighed on Duke Energy, which fell $US1.05 to $US23.70 after being downgraded by Morgan Stanley, Salomon Smith Barney and Goldman Sachs.




Last week, Duke said it had received subpoenas from the Commodity Futures Trading Commission and the Houston office of the US attorney for information related to its trading activities.




Energy company El Paso Corp, which said it received a similar subpoena from the Houston office of the US attorney, declined 25 cents to $US17.50.




Other losers included 3M, down $US1.98 at $US118.89, and Johnson & Johnson, which fell $US1.50 to $US49.




General Electric declined 35 cents to $US28.25, despite reaffirming its yearly earnings outlook last week.




Coca-Cola bucked the trend, rising 95 cents to $US52 following news that it will adjust its accounting to report results more fairly. Coke will begin treating future stock options as employee compensation.




Dell Computer advanced 42 cents to $US25.42, having raised its second-quarter earnings and revenue estimates on Thursday.




There was no economic news to inspire investors. The Commerce Department reported that businesses raised their inventories by 0.2 per cent, but analysts were mixed in interpreting the finding.




Some viewed the increase as a sign of an on-going slump in demand for goods, while others were hopeful that it meant companies were confident enough about the economy to increase their stockpiles.




Declining issues outnumbered advancers 3 to 1 on the New York Stock Exchange and volume was relatively heavy.




The Russell 2000 index, the barometer of smaller company stocks, fell 4.23, or 1 per cent, to 409.05.




Analysts say the dollar, weakening against international currencies, is another drag on the market, and has prompted many foreign investors to exit US equities.